Morocco increases VAT on Real Estate
Courtesy
http://www.propertywire.com, January 11, 2008
Effective January 1, 2008, a new tax policy that was bitterly
opposed is now in effect in Morocco.
The date was September 10, 2007, and the Moroccan nationalists had just
won the national election on the back of a poor 37% voter turnout. A
couple of months later the new Prime Minister, Abbas El Fassi, decided
that a major shake-up was needed in the country’s system of taxation.
However, the steps that he took to achieve that shake-up were bitterly
resented by the real estate and property industry within the budding
property hub.
The 2008 Finance Act was the result, and when it was passed by the
cabinet on November seventh, it threw the building sector into an
uproar. The inclusion of what was seen as harsh tax measures on Morocco
property owners and prospective buyers was the primary cause of concern.
Critics have said the measures would retard economic growth in an area
that has been experiencing a lot of it recently primarily due to a
strong real estate market.
The first major increase was one in corporate tax to the tune of 15%
effective January 1, 2008, and a further increase to 30% effective
January 1, 2009.
However, this was not the major point of contention, as it was really an
increase in the value-added tax that had so many people steaming.
Effective January 1, 2008, the Finance Act added 6% to the value-added
tax, bringing it from a 14% rate to a 20% rate starting this year.
Now, with the changes in corporate tax and value-added tax having been
put into effect, concerns that were aired at the time of the initial
legislation are once again being voiced. Concerns that the lack of tax
breaks would reduce competition and increase prices as well as concerns
that the increase in value-added tax would result in a marked decrease
in demand and therefore a decrease in the currently still hot Morocco
real estate market.
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